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How do I manage VAT when converting to Xero?

Changing to Xero. Can I enter the transactions in the month before the conversion date for VAT?

I converted to Xero from anohter system from 1st April 2019 which is the beginning of the accounting year. I entered the conversion balances on 31st March. However, the VAT period runs from 1st March to31st May. For that reason, I have entered all the transactions in March into Xero after entering the conversion balances. In other words, the March transactions which are in the old system are duplicated in Xero for VAT purposes. However, they will be on the final accounts to be prepared from the old system.

This should not cause a problem as they are not in the current accounting year? Also Xero automatically adjusted the conversion balances after March transactions.

Your help will be appreciated.

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By SXGuy
06th May 2019 16:53

What vat scheme you on? Cash or accruals? If cash then how would xero know when to include those invoices/receipts? I think you would need the transaction side of it also.

Personally I'd have probably just made a manual vat adjustment and included march figures.

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By Oki1970
to SXGuy
06th May 2019 20:08

Accruals. Yes it would have been much easier.

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06th May 2019 17:08

Making a bit of a rod for your own back there, with your weird VAT periods.

I'd probably have started on Xero from 1st March. It means duplicating March in the old and new systems but I'd probably want to do that anyway to reassure myself the new system was working OK.

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06th May 2019 20:29

On Friday evening I saw the first (small) business type in all of their transactions for the Jan-March quarter and then submit a vat return based upon those. I am expecting this to be quite a common way of working (which because the transactions are entered before the return is submitted is compliant). Hence I have planned my holiday so that I am not on holiday during the first week in August.

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By Matrix
06th May 2019 22:15

You say that the conversion balances changed after you entered March. Have you checked the balance sheet to check? I just don’t see how this would work if your start date in Xero is 1 April.

I would journal in the VAT for that month as previously mentioned on 1 April and manually change the VAT period or file with HMRC.

However I probably would have called the variation team for a 1 month return and had a clean start.

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By Oki1970
to Matrix
07th May 2019 00:41

What I have done is not a good idea. I cannot tell whether it has worked or not, really. I guess I have two options now:

1. Erase all of the March transactions and statement entries, and enter the March VAT, manually as you have suggested and was suggested previously. The additional complication with this is I have applied to MTD for VAT. I do not know if I will be able to do this with the new system.

2. Change the starting date in Xero to 1st March (instead of 1st April), and change conversion balances accordingly.

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to Oki1970
07th May 2019 06:58

Oki1970 wrote:

1. Erase all of the March transactions and statement entries, and enter the March VAT, manually as you have suggested and was suggested previously. The additional complication with this is I have applied to MTD for VAT. I do not know if I will be able to do this with the new system.


You do have other options for the changeover period (or otherwise). Those involves using bridging software for the actual MTD submission and an extract from Xero which you can then use a spreadsheet to develop adjustments (digitally recorded in the spreadsheet).

Once things stabilise then you can simply do the submission from Xero.

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